I just hired on with a new organization. The employer will not contribute matching funds to the 401k until I've been here for 2 years. Should I continue contributing the maximum amount (if that is my preference), even though it will only be my money going in?

Also, if I want these contributions applied to 2003, do I indicate this?

Also, if I want these contributions applied to 2003, do I indicate this?

Unlike your own IRA or ROTH, which you can contribute to up to Apr 15 if the IRA existed before DEc 31 of the previous year, in most employer plans, you can only contribute to the plan during the calendar year.

Thus, you can't make contributions now for 2003. You missed out.

If you have a separate IRA, that already existed in 2003, you can still make contributions in 2004 into that.

Other than the tax deferral of putting money into your employer's 401K now, there is no reason to max it out.....and if you want to put money into your own self directed IRA for 2 years, that would work as well. Sometimes an employer will let you shelter more than you can in an individual IRA (over 10K).

If I max out my IRA early on each year during these two years, would it be wise to contribute the maximum amount to the 401k?

Yes, I just love those pre-tax investment dollars! But I also would suggest that you max out the IRA first (and I hope it is a Roth!).

Also, AFTER you're in a position where your employer is matching, be careful how you time the 401K contributions. Some employers only match the first X percentage of each contribution you make. So, if you don't contribute on a regular and consistent basis, you might miss out on some of the matching funds.

telegraph wrote, If you have a separate IRA, that already existed in 2003, you can still make contributions in 2004 into that.

Please correct me if I am wrong but the IRA account does not have to exist in 2003 to make a 2003 contribution in 2004. It is possible to establish an account in 2004 and make both the 2003 and 2004 contributions.

The only guideline is that the 2003 contribution must be made prior to the tax filing deadline, excluding any extensions.